I'm a Singapore citizen living overseas. I want to start an online business as a sole proprietor in Singapore. Am I eligible? I have a ton of questions, but I thought I would start with this. Appreciate your help.

Some background, if I am indeed eligible:1) I have a parent staying in Sg - can I use the address when registering with ACRA? I co-own the HDB flat. 2) My business is online selling digital products and my customers are mostly from USA.

You can be the sole owner of a sole proprietorship when overseas. You can be the sole owner/shareholder of a private limited when you are overseas.

However, every business, ie, a sole proprietorship must have a normally resident manager, normally a Singapore citizen or PR, (to be able to receive legal notices, etc), so it would be essential for your parent and his/her address in Singapore to be the registered address of the business.

Same for a private limited. You must have a normally resident director, again, a Singapore citizen or PR.

Thank you for the reply. I do not have plans to employ anybody or expand beyond my one-man show, so I think it's sole proprietorship that I'm looking at, and not a private limited.

If you can please tell me more about the local resident manager.

1) Does the local resident manager have to do anything at all, apart from receiving mail? My mum is a Singapore Citizen and retired. If she agrees to do it, will she be eligible? Does she have to pay anything or do any kind of administrative work? I would like to handle everything, if that's possible, because she's not internet-savvy.

2) If she does not agree to do it, what are my other options? How much should I expect to pay and who provides such a service? I guess what I'm asking is how do I google for this?

hapchap wrote:Thank you for the reply. I do not have plans to employ anybody or expand beyond my one-man show, so I think it's sole proprietorship that I'm looking at, and not a private limited.

If you can please tell me more about the local resident manager.

1) Does the local resident manager have to do anything at all, apart from receiving mail? My mum is a Singapore Citizen and retired. If she agrees to do it, will she be eligible? Does she have to pay anything or do any kind of administrative work? I would like to handle everything, if that's possible, because she's not internet-savvy.

2) If she does not agree to do it, what are my other options? How much should I expect to pay and who provides such a service? I guess what I'm asking is how do I google for this?

Your mom is eligible and she doesn't have to actually do anything. Any reports, payments, etc could/would all be handled by you.

It's a legal thing. The gahmen wants to ensure that if the government wants to get into contact with you, or if another person or company wanted to serve you with legal documents, there would both be an address and a live person that could be served. Other than that, the person doesn't have to do anything.

I am unaware of any person who rents themselves out as your local representative, but if you were to find someone, I'd expect it would be similar in cost to renting a director, perhaps less, but still a significant cost.

As a sole proprietor based overseas, am I supposed to pay taxes in Singapore or my host country? I'm confused, because profits from my online business will be going into my Singapore bank account (intend to set up business account), but at the same time I am not living in Singapore.

hapchap wrote:As a sole proprietor based overseas, am I supposed to pay taxes in Singapore or my host country? I'm confused, because profits from my online business will be going into my Singapore bank account (intend to set up business account), but at the same time I am not living in Singapore.

Any income that is “accrued” or received in Singapore by a person or business is subject to income tax.

My goal is to pay taxes in Singapore. What would be my best option, please?

You really need to contact IRAS for a definitive ruling and not just listen to the opinion of the armchair quarterbacks on this board.

Having said that: My view is that you will pay your personal income taxes in Singapore and not in your host country.

Here is why: Normally, Singapore follows reciprocal taxation laws, and those laws generally say that income is taxed by the country in which you are normally resident. So, if I am resident in Singapore but working for a company based in Indonesia, I am taxed in Singapore. Similarly, if I am working in Malaysia, it doesn't matter where the company I work for is based, I pay taxes in Malaysia.

But, Singapore makes specific exemptions to this rule for owners, directors, and key managers of a business or company. In this case, because the company is a legal entity in Singapore and you are the manager, then you are considered to be working in Singapore for the company, no matter where you are located. I know this to be true for non-resident directors, and for key managers of a company who are non-resident: They are taxed at 22 percent which must be withheld before the funds are delivered to the non-resident manager or director.

Your case is more complicated for two reasons. First, your are talking about a sole proprietorship and not a private limited. I believe that you are still subject to the "key manager" provisions; however, you must confirm this aspect to know if your income is taxable in Singapore or not.

Second, you are a citizen. All of the IRAS webpages assume that the non-resident manager or director is a foreigner, and thus subject to the 22 percent tax rate and withholding. Again, you must contact IRAS to see how this regulations pertain to you.

Yours is an unusual situation and I would much appreciate it if you will post your findings when you contact IRAS regarding this matter. I've found that they usually respond to email inquires in two or three days.

In addition to the question of tax liability in Singapore, you also need to consider the tax regulations in your country of residence. Obviously it depends where exactly 'overseas' you are living, but certainly in some countries the rules are that you have to declare and pay tax (where applicable) on all your worldwide income. I believe that Singapore does not have that rule, but I know that at least some (maybe all) EU countries do, for example. This affects me directly - I live in one EU country but I have property in another EU country. I have to file a tax return and pay tax in both countries; there is a double taxation agreement that allows me to offset the tax paid in the 'non-resident' country against tax due in the country where I live, but the key point is that the tax authorities in my country of residence require me to declare my total worldwide income. Depending on where you actually live, this may or may not affect you, but I would suggest you seek advice in your country of residence on this point.